Platts says first LNG derivative spot deal done on its online platform
Unlike the oil market, trade of financial LNG contracts is at a nascent stage, but growing traded volumes and narrower price spreads between different regions are driving the need to use derivatives to manage risks on the market
LONDON: S&P Global Platts has said the first spot trade of a liquefied natural gas (LNG) derivative contract took place on its online platform on Thursday.
Unlike the oil market, trade of financial LNG contracts is at a nascent stage, but growing traded volumes and narrower price spreads between different regions are driving the need to use derivatives to manage risks on the market.
In the deal on Platts eWindow platform, energy trader Vitol bought from Trafigura 25 lots of October 2020 Japan Korea Marker (JKM) contract for $3.05 per million British thermal units (mmBtu).
Platts said there have been 88 bids and offers for JKM derivatives on eWindow since June 26, when the platform was launched.
JKM derivatives have also been trading via brokers.
JKM futures settle against the JKM which is increasingly becoming the benchmark for Asian spot cargoes, and are cleared through ICE and CME Group exchanges.
JKM derivatives cleared on ICE and CME Group in the first half of this year jumped 83 per cent to 78.8 million tonnes compared to the same period a year ago, Platts said.
